Prices Gone Crazy

Kerim Nuriyev

Background
The problems of access to oil fields and the associated factors of oil production, transportation and price setting became acute since the 1920s, i.e. from that very time when the humankind began to actively use this type of energy source. Besides, many experts believe that oil became of one the reasons to start World War II of 1939-1945. 
But in the 1970s this issue became particularly urgent. This time is characterized by the increasing oil consumption and constant shortage of oil refineries, establishment of the Organization of Petroleum Exporting Countries (OPEC) accompanied by general transfer of control over the Third World oil resources from American and European companies to national governments. The brightest example is the year 1973. At that time the military and political incentives pushed the Arab monarchies for the first time in history apply the “oil weapons” – embargo against Zionist Israel and its Western sponsors. The effect proved to be stunning. The price per barrel jumped up to 12 US dollars – an incredible figure at that moment.
In 1977 it was possible to beat down the prices by means of considerable supplies from Iran – a key US ally in the Middle East then which was not a member of OPEC. The oil consumption began to decrease as well due to the efforts made to reduce the economies’ energy capacity. However, this slackness did not prove to be long-lasting. The plans were blasted by the Iranian Revolution of 1979. By 1981 the price for oil had already reached 40 dollars per barrel. Extremely high prices did not drop for about two years until Venezuela and some other oil producing countries decided to exceed the limits of export quotas established by OPEC. This resulted in unmanageable landslide of prices which had dropped to 10 dollars per barrel by 1986. Besides, most analysts believe that is it this circumstance that resulted in collapse of the USSR economy whose main income items were oil and gas.
In the late 1990s the price for